Will the “Housing Renaissance” Lead to Economic Recovery?

The national housing market looks to be in the best shape it’s been for years, with rising prices, increased sales and decreased inventories becoming common all over the US. Few would argue that a recovery isn’t under way, and now some commentators are predicting that housing could well pave the way for a broader economic recovery.

Mark Zandi, chief economic analyst for Moody’s, ought to know better than most. Considered to be one of the nation’s leading economic authorities, he points to similarities between today’s “housing renaissance” and previous recoveries since World War II.

“A housing revival is key to any optimism about the broader economy and jobs,” explains Zandi to the Washington Post.

“Now that housing is finally getting its bearings, it will turn from an economic headwind into a tailwind and become a significant source of jobs. There will be more construction jobs, construction-related manufacturing jobs, transportation and distribution jobs, retailing jobs, financial services jobs and a range of service jobs from cable hookups to landscaping. A better housing market is the principal missing link to a better job market.”

That’s a pretty bold statement to make, even with the present signs of optimism all around us, but Zandi argues that driving this is the fact that owning a home hasn’t been so attractive in years, something that will tempt growing numbers of people to do what it takes to buy. While tight credit standards are holding some back (for now), those that can obtain are taking advantage of low housing prices and super-low interest rates. Zandi also points to another factor – increasing rents – that leads many to think that buying makes more sense from a financial perspective.